FATCA and Cryptocurrency Reporting for US Citizens: What You Must Know in 2026
If you're a US citizen holding cryptocurrency on a foreign exchange, you could be in serious trouble - not because you broke the law, but because you didn't know the rules. The IRS isn't just watching your bank account anymore. They're tracking your Bitcoin, Ethereum, and other digital assets held overseas. And if you're not reporting them under FATCA, you're risking penalties that can hit tens of thousands of dollars.
What Is FATCA and Why Does It Matter for Crypto?
FATCA, or the Foreign Account Tax Compliance Act, was passed in 2010 to stop Americans from hiding money in offshore accounts. It forces foreign banks and financial institutions to report details about accounts held by US citizens to the IRS. If you own assets abroad - stocks, bonds, real estate, or cryptocurrency - and they cross certain value thresholds, you have to file Form 8938 with your tax return.
The big question today: Does cryptocurrency count? The IRS hasn’t issued a clear, step-by-step guide saying, "Crypto on Binance or Kraken = reportable." But the law’s wording is broad enough to include it. FATCA defines "specified foreign financial assets" as anything held through a foreign financial institution - and many crypto exchanges qualify as such.
Take Binance, for example. Even if it's based in Malta or Singapore, if you log in from the US and hold crypto there, the IRS considers that a foreign financial account. The same goes for Coinbase Europe, Kraken, or any platform outside the US that lets you trade or store digital assets. These platforms are required under FATCA to report your activity - and if they don’t, the IRS will come after you.
When Do You Have to Report Crypto Under FATCA?
You don’t need to report every dollar of crypto. There are thresholds - and they depend on whether you live in the US or abroad.
- If you’re single and living in the US: You must report if your foreign crypto holdings hit $50,000 on the last day of the year OR more than $75,000 at any point during the year.
- If you’re married filing jointly and living in the US: The threshold is $100,000 on the last day of the year or $150,000 at any time during the year.
- If you’re a US citizen living abroad: The thresholds are higher - $200,000 on the last day of the year or $300,000 at any time during the year (for single filers).
These numbers are for the total value of all your foreign financial assets - not just crypto. So if you have $30,000 in a Swiss bank account and $40,000 in Bitcoin on Binance, you’re over the $50,000 limit. You must file Form 8938.
And here’s the catch: You file Form 8938 with your annual tax return (Form 1040). No separate form. No extra fee. Just attach it by April 15 (or October 15 if you file for an extension). Missing the deadline? Penalties start at $10,000 and can climb to $50,000 for continued non-compliance.
How Do You Value Your Crypto for FATCA?
Cryptocurrency prices swing wildly. One day your 1 BTC is worth $45,000. The next day, it’s $40,000. Which number do you use?
The IRS doesn’t give exact instructions - but they expect you to use a reasonable method. Most tax professionals recommend using the highest value your asset reached during the year, or the value on December 31. Why? Because underreporting is riskier than overreporting.
Example: You bought 2 ETH in January 2025 for $3,000 each. By June, ETH hit $4,200. By December, it dropped to $2,800. You report $8,400 (2 x $4,200) - not $5,600 - because you’re required to report the highest value during the year. The IRS doesn’t care if you lost money later. They care that you had $8,400 in foreign assets at one point.
And what if the exchange doesn’t give you a statement? No problem. You can list your login details, wallet address, or write "unknown" for the account number. The IRS knows crypto platforms don’t work like traditional banks.
Don’t Forget FBAR - It’s a Separate Rule
FATCA isn’t the only rule you need to worry about. There’s also FBAR - the Foreign Bank and Financial Account Report (FinCEN Form 114). This is a completely different form, filed separately with the Treasury Department, not the IRS.
For years, crypto was excluded from FBAR. But that’s changing. In late 2024, FinCEN proposed new rules that would require US citizens to report foreign cryptocurrency accounts if the total value exceeds $10,000 at any time during the year. The final rule is expected to go into effect in 2026.
That means you could soon be filing two forms for the same crypto holdings:
- Form 8938 (FATCA) - if you’re over $50,000 (or higher thresholds)
- FinCEN Form 114 (FBAR) - if you’re over $10,000
And here’s the kicker: FBAR penalties are even steeper. Willful non-filing can cost you up to 50% of your account balance per year - not just a flat $10,000.
What If You Already Held Crypto Before FATCA Rules Were Clear?
Many US citizens bought crypto years ago on foreign platforms before they knew they had to report it. Some still don’t know. That’s a problem - but not an unsolvable one.
The IRS has a program called the Streamlined Filing Compliance Procedures. It lets taxpayers who didn’t report foreign assets - including crypto - come forward, file back taxes, and pay reduced penalties (or sometimes none at all) if they can prove the failure was non-willful.
It’s not a free pass. You’ll need to file the last three years of tax returns (including Form 8938), the last six years of FBARs (if applicable), and pay any taxes owed. But compared to being caught by the IRS during an audit? This is the smart move.
What Happens If You Don’t Report?
The IRS is getting better at catching crypto non-compliance. They’ve partnered with foreign governments, pressured exchanges to hand over user data, and used blockchain analytics to trace transactions.
Here’s what you risk if you ignore FATCA:
- Penalties of $10,000 for failing to file Form 8938
- Up to $50,000 if you keep ignoring the requirement after being notified
- Additional FBAR penalties - up to $100,000 or 50% of your account value
- Interest on unpaid taxes from crypto sales
- Criminal charges in extreme cases (fraud, tax evasion)
There’s no statute of limitations for unfiled FBARs. The IRS can go back 10, 15, even 20 years if they suspect fraud. And they’re already doing it.
What Should You Do Right Now?
Here’s your action plan for 2026:
- Inventory your foreign crypto holdings - list every exchange, wallet, and platform outside the US where you’ve held crypto since 2013.
- Calculate the highest value of each holding during each tax year since 2013 (or since you first acquired it).
- Check thresholds - did any year exceed $50,000 (or higher if you live abroad)?
- File missing forms - use the IRS Streamlined Program if you’re behind.
- Set up a system - use crypto tax software like Koinly, CoinTracker, or ZenLedger to track values and generate reports automatically.
- Consult a crypto-savvy CPA - not just any tax pro. Find someone who understands FATCA, FBAR, and blockchain accounting.
Don’t wait for the IRS to find you. The best defense is a proactive disclosure. Even if you’re not sure whether you owe, file. It’s cheaper, safer, and far less stressful than a letter from the IRS.
What’s Next for Crypto and FATCA?
Regulators are moving fast. By 2027, we’ll likely see:
- Specific FATCA guidance for crypto - including how to classify different tokens
- Standardized reporting formats from foreign exchanges to the IRS
- Integration of crypto data into existing tax systems (like Form 1099-DA, which is already in development)
- More international cooperation - the US is pushing over 100 countries to share crypto data under FATCA
The era of "crypto is anonymous" is over. The IRS knows where your coins are. The only question is: Do you know where your compliance stands?
Do I have to report crypto on foreign exchanges even if I never sold it?
Yes. FATCA requires you to report the value of foreign financial assets - regardless of whether you sold, traded, or held them. If your Bitcoin on Binance was worth more than $50,000 at any point during the year, you must report it on Form 8938. Holding without selling doesn’t exempt you.
What if my crypto is in a self-custody wallet outside the US?
If you control the private keys and the wallet isn’t tied to a foreign financial institution (like a custodial exchange), it typically doesn’t count under FATCA. But if you use a foreign service to manage your keys - even a non-custodial platform that provides access tools - the IRS may still consider it reportable. When in doubt, report it.
Can I avoid FATCA by moving my crypto to a US-based exchange?
Yes - if you transfer your crypto to a US-based exchange like Coinbase, Kraken US, or Gemini, it’s no longer a foreign financial asset and doesn’t trigger FATCA reporting. But you still need to report any gains from selling or trading it on your tax return. Moving it doesn’t erase past obligations.
Do I need to report crypto if I’m not a US citizen anymore?
If you’ve formally renounced your US citizenship and filed Form 8854 (Initial and Annual Expatriation Statement), you’re no longer subject to FATCA. But if you’re still a US citizen - even if you live abroad permanently - FATCA applies. Dual citizens are not exempt.
What if I inherited crypto from a relative overseas?
Inherited crypto counts as a foreign financial asset if it’s held in a foreign account or on a foreign exchange. You must report it on Form 8938 if the value exceeds the threshold. You’re also required to report any gain if you later sell it. There’s no special exemption for inheritance.
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